Case Study: Pharmaceuticals / Healthcare / BioTech
BACKGROUND
ABC Company is a pharmaceutical research company that provides prescription medicine and research services throughout the United States. Despite their products and services being tax-exempt, they were paying a significant amount of use tax to various states due to incorrect implementation of their tax engine.
CHALLENGE
ABC Company had made purchases worth millions of dollars in several states. Unfortunately, their tax tax engine was set up incorrectly and the SAP accounting codes were mapped to the wrong code in the system, leading to wrong tax answers and millions of dollars in overpayments of use tax in multiple states.
SOLUTION
Mo analyzed the tax engine setup and interviewed the relevant parties in ABC's accounting and IT departments to identify the cause of the tax engine's failure. Sales tax research was conducted to obtain the correct taxability answers for the purchases made by the company. Mo filed use tax refund claims in several states, including NJ, PA, VA, and NC, after determining which purchases were booked to which SAP accounts.
RESULTS
The states contested the use tax refunds filed by ABC Company, but Mo defended the claims during the audit, and the company recovered millions of dollars in use tax. The taxability answers and mapping in their tax engine were corrected, and future return filings did not result in significant overpayments. To ensure more accurate monthly use tax accruals, ABC Company requested Mo to review their accruals regularly.
CONCLUSION
Thanks to Mo's assistance, ABC Company was able to recover significant amounts of overpaid use tax, stop the overpayments, and focus on business growth. The company no longer worried about unexpected overpayments, and Mo remained their trusted sales tax advisor whenever an issue arose.
AT A GLANCE
CHALLENGES
Incorrect implementation of tax engine led to millions in overpaid use tax.
SAP accounting codes were mapped incorrectly, leading to wrong tax answers.
Use tax refunds filed were contested by the states.
BENEFITS
Mo's analysis and expertise led to recovery of millions in overpaid use tax.
Correct taxability answers were obtained without additional costs.
Defense of refund claims during audit led to significant recoveries.
TIME AND RESOURCE SAVINGS
Analysis and interviews led to quick identification of the tax engine's failure.
Sales tax expertise saved resources by ensuring correct taxability answers.
Review of monthly use tax accruals saved time and resources by catching over/underpayments.
FINANCIAL SAVINGS
Recovery of millions in overpaid use tax resulted in significant financial savings.
Correction of tax engine mapping prevented future overpayments.
Review of monthly use tax accruals prevented future over/underpayments.
EXPERTISE
Sales tax expertise identified tax engine's failure and ensured correct taxability answers.
Defense of refund claims demonstrated expertise in handling complex sales tax issues.
Review of monthly use tax accruals demonstrated continued expertise in ensuring accurate tax filings.
ADDITIONAL BENEFITS
Mo's assistance provided peace of mind, allowing ABC Company to focus on growth.
Trusted advisor status allowed immediate consultation on issues.
Recovery of overpaid use tax improved financial position, increasing credibility in the market.
OUR MISSION
What sets us apart from other sales tax consulting firms is our commitment to offering top-notch services without charging exorbitant fees typical of other firms.
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We believe that every business deserves quality sales tax consulting that is accessible and affordable, and we have built our practice around this core value.
